How to Legally Declare a Business

By David Carnes

Many forms of business organization are available to the budding entrepreneur, including sole proprietors, partnerships, LLCs and corporations. Among these, the corporation is the most popular, in part because it allows you to protect your personal assets from creditors of the corporation.

Choose your state of incorporation; it need not be the state where your office is located. Delaware is the most popular state of incorporation, because its laws are favorable to corporations in many ways.

Choose a name for your corporation; the name must include the word "Inc." or "incorporated." Although it need not be descriptive of your business, it must be original (nobody else may be using it) and it cannot contain certain words such as "bank" or "federal," unless they apply to your business. Your state's Secretary of State website should have a list of the available words, along with a list of corporate names already in use.

Appoint directors of your corporation. You may appoint yourself as a director. Some states will allow only one director, while others require more than one if there is more than one owner. Directors normally make most of the major decisions for the company, although sometimes this task is delegated to employees.

Appoint your corporation's Registered Agent. The Registered Agent is the person who receives important notices and legal documents on behalf of the corporation, including notification if the corporation is sued. Although you may appoint yourself as the Registered Agent, the Registered Agent need not be an owner, director or employee of the corporation. Many corporations appoint their lawyer as their Registered Agent.

File the company's Articles of Incorporation. This is a simple, one-page document that can be downloaded from your state's Secretary of State website. It requires basic information about the corporation, such as the name, directors and Registered Agent. It must be filed with the Secretary of State, along with a small fee. The corporation is legally formed as soon as its Articles of Incorporation are filed.

Draft the corporate bylaws. This document is much longer than the Articles of Incorporation, and functions as a constitution for the corporation. You may need legal assistance at this stage, because state laws require the inclusion of certain information.

Hold initial shareholders and directors meetings. Shareholders meetings must be held at least once a year, even if you are the only shareholder. Minutes of these meetings must be kept and retained in corporate records.

Register to do business as a "foreign corporation" with the Secretary of State of the state where your head office is located, if it is different from the state of incorporation.

About the Author

David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.

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